Wednesday, August 27, 2014

Judge denies Apple bid for sales ban against Samsung in second California patent case

Judge Lucy Koh has just denied Apple's motion for a permanent injunction against Samsung over the three patents underlying the jury verdict at the end of the spring trial. This is a very significant setback for Apple, which less than six months ago had already failed, despite a partly-successful appeal, to obtain a sales ban against Samsung in the first California litigation between the two companies, an outcome that Apple accepted as final about a month ago when it withdrew its related cross-appeal.

The denial of an injunction following the recent trial in the second California case is based on Apple's failure to satisfy the eBay v. MercExchange factors for injunctive relief over patents. In a striking parallel to the other case, Judge Koh stressed that "Apple has not satisfied its burden of demonstrating irreparable harm and linking that harm to Samsungs exploitation of any of Apple's three infringed patents." Furthermore, "Apple has not shown that it suffered any of these alleged harms because Samsung infringed Apple's patents." In other words, Apple failed to demonstrate that Samsung's competition is substantially unlawful.

In order to prevail on this motion, Apple would have had to show that "the patented inventions drive consumer demand for the infringing products," which it couldn't (because, in my opinion, it's simply not the case). The court believes that monetary damages are sufficient compensation for the infringements identified in this case. Apple convinced Judge Koh that there was a strong public-interest case here because Apple's injunction motion was "narrowly tailored," Judge Koh still finds that, at the end of the day, the lack of irreparable harm remains outcome-determinative in Samsung's favor. Citing the Federal Circuit, the decision notes that without a clear causal nexus between infringement and irreparable harm, "a court cannot distinguish 'between irreparable harm caused by patent infringement and irreparable harm caused by otherwise lawful competition.'" In this context, it certainly didn't help Apple that, as the order notes, "Apple does not currently practice all of the patents at issue."

Three weeks ago, Apple and Samsung agreed to withdraw all litigation pending between them outside the United States. Apple's continued inability to convince U.S. courts that its patents entitle it to drastic remedies has probably increased the likelihood of a near-term settlement of the remaining litigation between them (though it could still continue for some time if the parties can't agree on a payment covering past infringement).

After today's decision, it's likely that Judge Koh will very soon (it might even happen today as well) rule on the parties' other post-trial motions. Samsung is pushing for a further adjustment in its favor, especially for the invalidation of certain asserted patent claims such as this one, while Apple would ideally like a retrial because the damages award was disappointing from its point of view: it wanted almost 20 times as much money as the jury awarded.

This decision is great news not only for Samsung but also for Google, the developer of the Android mobile operating system. In this second California case, Apple is essentially suing Samsung as a proxy for Google.

Here's the public redacted version of Judge Koh's order:

14-08-27 Order Denying Apple Motion for Permanent Injunction Against Samsung by Florian Mueller

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Thursday, August 21, 2014

Judge Koh denies Samsung's Alice-based motion against two Apple patents for untimeliness

The first post-trial decision in the second Apple v. Samsung case in the Northern District of California has just come down. Judge Lucy Koh just denied Samsung's early-July motion to hold two of Apple's patents-in-suit invalid in light of the recent Supreme Court decision in Alice v. CLS Bank. The decision is based entirely on a procedural question. Judge Koh held that (as Apple had argued) Samsung had not preserved its original invalidity defense under § 101 and it was now, in Judge Koh's opinion, too late to raise the issue of abstract subject matter.

I don't have an opinion on this one; I just wanted to share the news and, if you're interested in further detail, the decision:

14-08-21 Order Denying Samsung's Alice-based Motion by Florian Mueller

Two weeks ago it became known that the United States Patent and Trademark Office (USPTO) has rejected various claims, including the one asserted in this litigation, of Apple's autocomplete patent (on a non-final basis). Judge Koh has yet to rule on the parties' post-trial motions for judgment as a matter of law, and validity of the autocomplete patent is going to be one of the more relevant issues.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Monday, August 18, 2014

Google asks appeals court to move Rockstar patent cases against Android device makers out of Texas

Google really doesn't want its Android device makers to mess with the Rockstar Consortium (which is owned by Apple, BlackBerry, Ericsson, Microsoft, and Sony) in Texas. Last December it brought a declaratory judgment action against the Rockstar Android cases in the Northern District of California, and the chief district judge held that California was a proper venue because Rockstar's patent lawsuits advance Apple's interests (Apple is headquartered in that district). As I said at the time, the Rockstar Consortium is so opaque that Apple isn't necessarily responsible for those lawsuits -- but responsible or not, Apple is a potential beneficiary.

But the California decision didn't persuade Judge Gilstrap in the Eastern District of Texas (who has previously been overruled by the Federal Circuit because he denied transfers of venue) to put his case on hold or to transfer it to California. When two district courts practically disagree on the proper venue, clarity can only be provided by an appeals court. That's why Google filed a petition for writ of mandamus (i.e., a request for the appeals court to interfere with an ongoing case, as opposed to an appeal in the narrow sense of the word, which relates to a final ruling) with the Federal Circuit last week. The objective is to have the Texas cases transferred to California (where Google developed Android) or at least to stay the Texas litigations until the California case has been resolved (which would have the same effect as a transfer).

This is what I expected to happen. In fact, I expected it a while ago. In February I wrote that "[w]e m[ight] very well see one or more mandamus petitions in this context" because "these defendants won't leave a stone unturned in their attempts to move the matter out of Texas." In March, I predicted that Judge Gilstrap wouldn't grant the Android device makers' motion to transfer venue, but that his decision wouldn't "dissuade Google and its OEMs from filing a somewhat likely mandamus petition with the Federal Circuit." I noted that Google could lose in Texas or win in California, but "especially with a view to pretrial decisions (summary judgment etc.), the Northern District of California would clearly be a better venue for the defendants in these cases." There we go.

While Apple and Samsung recently dropped all of their ex-US patent infringement actions against each other and Google (jointly with Motorola) reached a similar ceasefire agreement (even of worldwide scope) with Apple, the Rockstar lawsuits are continuing. In addition to still dealing with Apple in the U.S. (directly and through Rockstar) Samsung now basically has a two-front war with Microsoft: a contract action in New York plus that Rockstar lawsuit in Texas.

Some of the same players (as in the direct disputes between certain key organizations) are involved. Quinn Emanuel, the firm that had the lead in fending off Apple and Microsoft's lawsuits against Android (except for Samsung's defensive efforts in Germany, where credit for preventing Apple from ever enforcing any software patent against Samsung goes to the firms of Rospatt, a litigation firm, and Zimmermann & Partner, a patent prosecution firm with considerable litigation expertise) to the point that neither of those players ever achieved significant leverage, brought the mandamus petition against Judge Gilstrap's "what is filed in Texas stays in Texas" approach. I think it's very likely that Quinn Emanuel will defuse the Rockstar lawsuits just the way it defused the lawsuits brought by two of Rockstar's largest owners. But that is going to be more feasible in the Northern District of California than in the Eastern District of Texas.

[Update] I have a small correction to make. While the official caption of the Federal Circuit cases is In re Google, Google is (which comes as no surprise) not alone in this effort. For example, Samsung also filed a petition, and that's the one I downloaded first from the docket and published here. There are several related case numbers. [/Update]

If you're interested in further detail, here's Samsung's petition:

14-08-14 Google Petition for Writ of Mandamus (Rockstar Cases) by Florian Mueller

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Thursday, August 7, 2014

U.S. patent office rejects Apple's autocomplete patent claim Samsung was found to infringe

Apple has just given up its thermonuclear ambitions and practically agreed with Google's 2011 statement that "bad software patent litigation is a wasteful war that no one can win", but even in the U.S., the only jurisdiction in which Apple is still trying to at least collect a face-saving amount of money, there's bad news. The United States Patent and Trademark Office (USPTO) has very recently rejected multiple claims of Apple's '172 autocomplete patent, including claim 18, the one asserted against Samsung in the second California litigation.

Judge Koh had ruled on summary judgment (i.e., ahead of the spring trial) that Samsung infringed it -- but infringement of an invalid patent doesn't matter, and only because the jury was grossly misled about the validity of issued patents in general and Apple's patents-in-suit in particular doesn't mean that Judge Koh couldn't still agree with Samsung's post-trial motion and hold claim 18 of the '172 patent invalid. The legal standard is stricter in the infringement case (especially now at the JMOL stage) than in reexamination, where clear and convincing evidence is sufficient to reject a patent claim, but it looks awkward that Judge Koh held Samsung to infringe a patent claim that the USPTO probably wouldn't have granted if it had been aware of all of the relevant prior art. In a new filing, Samsung just drew Judge Koh's attention to this decision and stressed the fact that "the USPTO concluded that the prior art identified in the Office Action is the same or in the same family as the prior art asserted by Samsung in this case."

The $119 million verdict in the second California case was disappointing enough for Apple when it came down a few months ago and may have played a role in its decisions to agree to ceasefires with Google/Motorola and (in eight countries) Samsung, but it could be further reduced as a result of patents being held invalid (or not infringed).

Here's Samsung's notice to Judge Koh, with the USPTO Office Action (which is not final, and it would take several years if Apple exhausted all appeals) included in the same PDF file:

14-08-07 Samsung Filing on Office Action in Reexamination of Apple's '172 Patent by Florian Mueller

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Google said it in 2011: 'Bad software patent litigation is a wasteful war that no one will win'

After Apple and Samsung declared a truce in all countries except the U.S., where they have also narrowed their dispute considerably through recent procedural moves (1, 2), it's clearer than ever that patents won't stop Android (or even just slow it down).

Was this foreseeable all along? Did Google know that after years of litigation, Steve Jobs's "thermonuclear war" would end in a stalemate?

Three years ago at about this time of the year, Google acquired Motorola Mobility, and it wouldn't have spent $12.5 billion on that company if it had not seen a need to acquire patents to defend Android. It also acquired patents from other sources. In late July 2011, when Google's purchase of more than 1,000 patents from IBM became known, a Google spokesman told the Los Angeles Times and other media in an emailed statement:

"Bad software patent litigation is a wasteful war that no one will win."

What looked like an exhortation to hold out, directed at the Android ecosystem, appears amazingly foresightful from today's perspective. No one has won the smartphone (software) patent wars after all those years. The most active litigant, Apple, has already backed out for the most part.

I just wish to clarify that the first part of Google's statement can't necessarily be interpreted as saying that all software patents are bad. Google most likely meant that the ones asserted against Android were bad. That's also what Google's chief legal officer David Drummond said in a corporate blog post ("When patents attack Android") at around the same time:

"[...] Android's success has yielded [...] a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents."

I disagreed then and disagree now with the claim that this was an "organized campaign" because those three companies pursued rather different objectives. Even if one argued that Microsoft and Apple have in common that they build rival platforms (and are shareholders of the Rockstar Consortium, though not necessarily responsible for the Rockstar litigation mess to the same extent), Oracle would still be the "odd man out" on this list because it will literally love Android as soon as Google takes a Java license and wouldn't have anything to gain from damaging Android. For now, Google is trying to avoid this and preparing an appeal to the Supreme Court. Still, there's a pretty high likelihood of Oracle and Google ultimately becoming business partners, long before Apple will build its first Android phone (if it ever does, but its co-founder Steve Wozniak suggested so). By now (not at the time of Mr. Drummond's post), there's another factor that sets Oracle apart from the other litigants: its case is now exclusively a copyright case (its patent assertions didn't work out). At the end of this litigation, I expect Oracle to have way more leverage over Google than Apple ever had, but thanks to copyright, not patents -- and due to the fact that there was literal copying involved with respect to Java, as opposed to iOS.

This is not the time and place to go into more detail on whether Mr. Drummond was right that the patents asserted against Android were "bogus patents". For now I just want to recognize that Google was right that no one was able to win the smartphone patent wars. And that does say something about the quality of the patents asserted, but it's a more complex question why those assertions failed and what the litigation results tell us about patent quality -- I won't necessarily disagree with Mr. Drummond on "bogus patents" but I'd want to explain my position in more detail. I addressed some of the factors in a recent panel speech at a conference held at a German university, where I showed statistics of the extremely low rate of success of all major litigants (also including Nokia, by the way) and the absence of serious, lasting business impact of the few injunctions that were ever enforced, and plan to blog about it in the not too distant future. All I wanted to say at this point is that the smartphone software patent disputes between large players have so far (unless there's a complete surprise in the months or years ahead) turned out to have indeed been a wasteful war that no one has won. I hand it to Google that it accurately predicted this outcome in 2011.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Wednesday, August 6, 2014

Apple and Samsung drop all non-U.S. patent suits against each other, keep suing in U.S.

Apple and Samsung have not yet reached an actual and complete settlement, i.e., a worldwide license agreement, but at least they've agreed to a ceasefire in a host of countries. As Yonhapnews and other news agencies report, "Samsung Electronics and Apple have agreed to end patent-related disputes in all countries, except for the U.S.", but there is no license agreement in place. Still, congratulations to both on conserving resources!

This is structurally reminiscent of a recent agreement between Apple and Google/Motorola, though the Apple-Google-Motorola agreement had worldwide scope. But there are also some important differences between the related U.S. lawsuits. Not much had happened between Apple and Motorola yet in the U.S., while there have been three U.S. trials already (in two federal litigations) between Apple and Samsung. Another difference is that Apple's U.S. dispute with Motorola never involved design patents (Apple only asserted the European equivalent of a design patent, a Community design, against a Motorola tablet in Germany). Design patents account for the bulk of the damages award Apple obtained in its first California case against Samsung.

Outside the U.S., the companies had litigation pending against each other in Germany, the UK, France, Italy, the Netherlands, South Korea, Australia, and Japan. Neither party had won a decisive victory against the other. Maybe things could have become tricky for Apple in South Korea at some point, where Samsung had prevailed on a couple of standard-essential patents but an injunction had been stayed pending an appeal. However, Apple's market share in that country is no longer huge.

In Germany, where I went to almost every Apple-Samsung trial relating to technical (not design) patents, it was a complete wash: they asserted seven technical patents each, and all cases were either dismissed (though appealed) or stayed. Apple is the only litigant in the ongoing "smartphone patent wars" to have been unable to so far (one opposition proceeding before the European Patent Office had not yet been resolved) to salvage even the smallest part of any of its patents-in-suit (in Germany, to be clear). Samsung and Motorola defeated each and every Apple patent before the Federal Patent Court of Germany including any amendments Apple had proposed. Those amendments would have narrowed the scope of the patents, but the German patent judges threw out the amended claims as well. With Samsung and Motorola no longer having to defend against Apple's German infringement cases, various patents including slide-to-unlock (which ten European judges found invalid) and photo gallery rubberbanding will be technically alive for some more time, though any attempt by Apple to enforce them in Germany against other defendants would be a long shot because judges would look at the record of the Samsung and Motorola cases and have serious doubt about the validity of those patents.

The U.S. is a significant and lucrative part of the worldwide market for smartphones and tablet computers, but most of the volume is outside the U.S., so if Apple has now recognized that it can't gain leveage over its fiercest rival anywhere else, it will have to come up with something else than the thermonuclear patent war envisioned by Steve Jobs if it wants to stop Android from further marginalizing iOS outside the U.S.

Even in the U.S., Apple's ability to regain market share through patent litigation is very doubtful. Its U.S. patents so far haven't been strong enough either. The "defining moment" that affected my perspective on the strategic relevance of Apple's U.S. patent infringement lawsuits against Android far more than any other was when I found out that a U.S. import ban over the so-called "Steve Jobs patent" had no commercial effect after entering into force last October -- because a workaround had been cleared by the United States International Trade Communication (ITC), and the workaround was technically so good that no consumer appeared to notice any change whatsoever. In June, these companies agreed to withdraw their related cross-appeal.

Apple may believe that it has a few more patents in stock with which it can gain leverage in the U.S., so maybe we'll see a third U.S. Apple v. Samsung lawsuit. But that appears less likely to me than another possibility. It may very well be that at this point Apple just hopes for a somewhat face-saving exit by collecting a significant damages award (or, more likely, obtaining a settlement before it gets there) based on, for the most part, design patents. Even after giving up thermonuclear ambitions, Apple's goal may now be to get a billion-dollar payment, or possibly a one-time payment plus a certain amount of ongoing royalties on U.S. sales, so it can say it has at least covered large parts or all of the costs of its patent war on Android. But I'm not even too optimistic about Apple's prospects of achieving that.

On the occasion of this high-profile ceasefire, it's worth taking a quick look at where all those high-profile patent infringement lawsuits against Android have gone. The answer is: pretty much nowhere. Apple settled with HTC before anything big had happened. It agreed on a ceasefire with Google/Motorola (also before anything of note had happened between the two). It has now limited its litigation with Samsung to the U.S., where the first case is on appeal and now only about money (Apple gave up its quest for an injunction in that first litigation). There's still something going on between Microsoft and Motorola in the U.S. and Germany, but so far Microsoft has not gained decisive leverage over Motorola, after almost four years of litigation. I explained this in my recent post on a contract lawsuit filed by Microsoft against Samsung. If Microsoft prevails on its interpretation of its patent license agreement with Samsung, there won't be any infringement actions between those two companies for a long time; otherwise we might see some.

That leaves only one really important infringement action that is still ongoing, and it's no longer about patents, just about copyright: Oracle v. Google. Google is preparing to appeal Oracle's appellate victory to the Supreme Court.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Tuesday, August 5, 2014

No-tech and low-tech companies side with Apple on design patent damages in Samsung case

After Apple very recently dropped its cross-appeal in the first Samsung case, the case is just about money. The immediate issue on appeal is the $929 million damages award (resulting from two jury trials), which is mostly about design patents; after the appeal, the attention may turn again to utility (i.e., technical) patents once Apple seeks post-judgment royalties for alleged or potential infringement further down the road.

Apple is trying hard to defend the verdict(s), and Samsung is facing a significant but not insurmountable hurdle in its quest for adjustments.

The bulk of Apple's damages award would be history if the Federal Circuit agreed with 27 law professors and industry group CCIA that, for whatever reason or combination of reasons, an unapportioned, wholesale disgorgement of infringer's profits is not what the law requires, even though Judge Koh thought it did and Apple still says it does.

Yesterday (Monday) any amici curiae filing letters in support of Apple had their deadline. None of the filings is publicly accessible by the time I'm writing this, but the headlines of the docket entries are interesting enough by themselves (and unless I find anything in the submissions that warrants immediate reporting, I'll wait with my analysis of those filings until I comment on Samsung's reply brief, which is due in less than a month further to an extension that was granted).

Two things are noteworthy about the headlines of those submissions:

  • While I've disagreed more than once with the Computer & Communications Industry Association, I thought it raised an interesting argument in this particular context of design patent damages. And while CCIA routinely files amicus briefs in support of members, the fact of the matter is that the organization does have a reasonably broadbased membership. If I see a CCIA brief that any significant part of its membership openly disagrees with (such as in Oracle v. Google), then I'm usually not impressed. But if no CCIA member dissociates itself from the group in connection with a certain issue or case, then (and only then) a CCIA submission must be seen as a position of very significant parts of the information and communications technologies (ICT) industry, or even as a consensus position of very large parts of the industry.

    Unlike Oracle, which enjoys tremendous support from other high-tech companies in its defense of software copyrightability, Apple is isolated in the (ICT) sector with its pursuit of exorbitant design patent damages. Traditional ICT innovators apparently don't want design patent holders to be overcompensated to an extent that would have chilling and stifling effects on true innovation.

    The companies supporting Apple's design patent damages award are, relatively speaking (i.e., by comparison with CCIA's membership), no-tech and low-tech companies and one pharma/medical devices company (Novo Nordisk; not an ITC player either): Crocs, Inc.; Design Ideas, Ltd.; Novo Nordisk, Inc. ; Lutron Electronics, Inc.; Nuvasive, Inc.; Method Products, Pbc; Oakley, Inc.; Deckers Outdoor Corp.; and Kohler Co.

    The fact that only companies that make products like shoes, furniture or (at best) light switches (compare that to a smartphone...) support Apple on this issue actually strengthens the argument made by Samsung and its amici that the notion of unapportioned design patent damages may have been appropriate a couple of centuries ago but would completely devalue the innovative technologies of our times.

  • Non-industry Apple-supporting amici include "54 distinguished industrial design professionals" (whose interest in maximizing the commercial value of design patents is obvious) and a group of "Design Educators".

    I haven't seen a list of names, but no matter how competent and credible those people may be (most probably they are), it strikes me as odd that these two groups are represented by Apple's own lawyers -- something I haven't seen in any of the other appellate proceedings I've watched over the last few years. Those amicus curiae briefs always come with a disclaimer that no party took part in drafting the brief or supported it financially. Such a disclaimer will most likely also be found in those briefs. But I've never before seen so much proximity between amici curiae and the party they support. Counsel for "Design Educators" are Gibson Dunn lawyers some of whose names I've seen on countless Apple filings (Mark Perry, Mark Lyon), while Orrick lawyers led by Mark S. Davies, who played a key role (very successfully, by the way) in several Apple-Motorola appeals, represent the "54 distinguished industrial design professionals".

    This doesn't make any argument in those briefs weaker. However, I've said in connection with multiple cases that amicus curiae briefs are not just about what is said but also about by whom it is said. The more independent an amicus curiae is, the more credibility the related filing will enjoy. For example, it's a very strong message if even fierce competitors of a party, who would benefit in the short term from their rival losing a case, express an overarching concern over an issue. Here, it surprises me that the design educators and professionals supporting Apple's design patent damages award apparently couldn't find lawyers without close Apple ties to represent them. Maybe other high-profile lawyers really don't want to support exorbitant design patent damages and believe that their existing clients are more likely going to need help to fend off whatever outrageous design patent damages claims others would bring if Apple defended the verdict(s) on appeal.

    To be clear, I don't think those design educators and professionals could have found better lawyers than these in terms of expertise and skills. In particular, I can't think of a better firm for the Federal Circuit than the Orrick team that represented Apple in the Motorola case and has also won, on Oracle's behalf, the reversal of Google's non-copyrightability ruling. But displaying so much proximity to a party is, as I said, unusual and (in the cases I watch) unprecedented for a group of amici curiae.

While the first Apple v. Samsung case has become a lot less interesting as a result of Apple's withdrawal of its cross-appeal, Judge Koh's post-trial rulings in the second case will be more interesting. Those will probably come down this summer.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Friday, August 1, 2014

Microsoft sues Samsung over Android royalties -- a contract dispute, not an infringement case

Today Microsoft filed a contract lawsuit in the Southern District of New York against Samsung over the companies' Android-related patent license agreement, which was concluded in 2011. So far only Microsoft's version of the story (the first link above) is known: Samsung allegedly doesn't believe to be bound by the 2011 agreement as a result of Microsoft's acquisition of Nokia's handset business, a position that Microsoft describes as "meritless". The most positive aspect of the announcement is that Microsoft still hopes to continue its partnership with Samsung, despite this disagreement. As a consumer, I hope so, too.

Microsoft would certainly have preferred to bring this complaint in the Western District of Washington (where it prevailed over Motorola in another contract matter, which is now on appeal) but presumably the contract required any lawsuits to be filed in New York.

Microsoft's position on the interdependencies of the Nokia acquisition with its Samsung license agreement is no secret. Back in September 2013 (when the Microsoft-Nokia deal was announced) I blogged about some Microsoft slides relating to patent licensing in the Nokia context, and here's the key bullet point again:

"Microsoft's agreement with Samsung will provide coverage for these additional devices without added payments"

It's not hard to see why Microsoft would like this to be the case, and why Samsung would not want it to be the case. The net effect would be that

  • Samsung would pay Microsoft per-unit royalties on all Android devices,

  • Microsoft would pay Samsung nothing for the use of any Samsung patents (such as wireless standard-essential patents) in the former Nokia devices, and

  • Nokia is, as a result of its Microsoft deal, free to collect patent royalties from Samsung.

This is obviously not the kind of outcome that Samsung could have foreseen when it entered into the Microsoft license agreement in 2011. But the key legal question is going to be whether the Microsoft-Samsung contract covers this situation regardless of whether Samsung could have reasonably anticipated it.

I guess Microsoft will do all in its power to obtain sealing orders for its contract terms, but it won't be able to get everything sealed, especially not in the event that the matter ultimately goes to trial (I guess it won't because they will settle beforehand, but you never know). GeekWire has published a redacted version of Microsoft's complaint.

Microsoft's Android patent licensing program is a huge dealmaking success. The outcome of Microsoft's Android-related patent enforcement efforts against Motorola is a separate story. Microsoft is currently able to enforce one patent against Motorola's Android devices. It won three injunctions in Germany but all three patents -- and a few more that Motorola hadn't been found to infringe in the first place -- have since been declared invalid by the Federal Patent Court of Germany (the related decisions are presumably being appealed). In the U.S., Microsoft asserted nine patents against Motorola at the ITC. The ITC ordered an import ban over one of them, and the Federal Circuit upheld that decision and sided with Microsoft on a second patent, but that one had already expired, so Microsoft can only seek damages for past infringement over that one.

It's possible that Samsung now feels it would have been a better choice to do things the Google-Motorola way and take its chances in court than to agree three years ago to pay royalties. Motorola has been defending itself against Microsoft for almost four years, and apart from being temporarily unable to ship products into the German market (for four months according to Motorola's counsel's representations in court), Motorola has been doing just fine -- unless Microsoft at some point gets decisive leverage over Motorola, in which case the ultimate conclusion could be that licensing would have been a better choice than litigation, though as of now, Motorola has almost certainly spent much less on its defense than it would have paid in royalties. And, by the way, Samsung and Motorola use the same law firm (Samsung against Apple, maybe now also against Microsoft; and Motorola against Microsoft as well as Apple): Quinn Emanuel.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Apple responds to Samsung appeal of first California ruling, defends jury verdict all the way

On Monday, Apple had a deadline for its opening brief in the appeal of the final ruling in the first Apple v. Samsung case and somewhat surprisingly dropped its cross-appeal. As a result, Apple's opening brief, filed later in the day, was all about defending the jury verdict. The part that was not surprising is that Apple decided to consistently defend the jury verdict rather than run into any contradiction with itself by saying the jury got things wrong there it sided with Samsung but was absolutely right wherever it agreed with Apple. The unexpected part is that Apple finally gave up its pursuit of a permanent injunction in its first Samsung case. Apple could still seek an injunction over the same patents in connection with different products (and then try to present stronger evidence of irreparable harm), but a new complaint and a whole new liability ruling would be needed (which would take time).

Apple's defense of the 2012 jury verdict would be futile if the things certain jurors later told the media (about intentional ignorance of the prior art, for example) were a basis for setting the verdict aside. Fortunately for Apple, the United States Court of Appeals for the Federal Circuit, while aware of what the media reported, will (have to) rule on a different basis.

I don't disagree with Apple philosophically. It's true that Apple presented a pretty strong "copying" story at the 2012 trial, a story that would likely have persuaded many other juries to come down on Apple's side, even if not necessarily to the same extent. This year's trial in the second California case between these parties didn't go nearly as well for Apple because there was a bit of a disconnect between Apple's copying rhetoric on the one hand and the merits of its infringement assertions on the other hand.

There's a lot that one could say about a brief of approximately 100 pages (Samsung had also been granted additional pages for its opening brief in this appeal). I'll just share a few observations below the document:

14-07-28 Apple Responsive Brief to Samsung Appeal by Florian Mueller

Usually the table of authorities does not warrant any comment. Here, however, it's interesting that Apple's brief cites to writings by several of the 27 law professors who filed an amicus curiae brief a few months ago in support of Samsung's efforts to get the design patents-related part (i.e., the bulk) of the $929 million damages award reduced. In the "Other Authorities" section you can find writings by Professors Thomas Cotter (author of the Comparative Patent Remedies blog, which I have recommended previously), Mark Lemley, Mark McKenna & Katherine Strandburg, Michael Risch, and Ryan Vacca. It's a nice idea that Apple tries to leverage previous writings by those amici against their recent brief. (I'm sure the amici would disagree that there is any contradiction between their earlier writings and their brief.)

With respect to design patent-specific legal issues, I tend to agree with Apple that the concept of "purely functional" design elements should be interpreted more narrowly than Samsung suggests in its brief -- protection should be denied only if a design element is truly "dictated" by functional requirements. (If you have read my posts on Oracle v. Google, you know that I have a similar perspective on functional restrictions in connection with software copyright.)

Apple argues that there is no "risk of double recovery" if an unapportioned disgorgement of infringer's profits is awarded. I still believe that Samsung and its amici are right that unapportioned disgorgement is nonsensical in a world in which products, unlike some old non-tech products such as carpets, may be found to infringe more than one design patent at the same time. Apple focuses on the scenario in which "a patentee with multiple overlapping design patents could recover an infringer's profits several times over." Apple indeed didn't try this: it sought a disgorgement of infringer's profits (and not a multiple thereof) despite asserting, and establishing in the eyes of the jury, infringements of multiple design patents. But what if the same product infringes two (or more) design patents held by two (or more) entities? Apple does address this possibility: "if that hypothetical concern ever materialized, an infringer could always invoke impleader, as one of Samsung's amici [Prof. Lemley] explains." This does not seem to be a great solution, and in any event, even if a procedural solution existed, there is a conceptual problem with a rule that results in excessive remedies. Also, let's not forget that the issue is not only one of potential infringement of multiple design patents but that a high-tech product involves other intellectual property rights than just design patents. Apportionment is the only sensible solution, and it appears that the jury (which granted Apple less than half of what it wanted) somehow also felt that a complete disgorgement was over the top, but Apple now seeks to defend the verdict and, therefore, the instructions Judge Koh gave two years ago.

There are two issues with the first sentence of the introductory part (page 2) of Apple's brief, both of which show that Apple now attempts to defend a mostly design patent-based damages award by conflating design and technology:

"Apple spent years and millions of dollars developing innovative designs and features for its iconic iPhone and iPad, which revolutionized the smartphone and tablet computer markets."

First, while the iPhone and the iPad undoubtedly revolutionized the smartphone and tablet computer markets (in fact, the iPad even created the tablet computer market, practically speaking), the designs per se (which the bulk of the $930 million damages award relates to) did not revolutionize anything.

Second, the designs themselves only cost "millions". That is not a strong point when asking an appeals court to uphold a damages award amounting to almost a billion dollars. The million-billion discrepancy actually indicates that there is a risk of massive overcompensation in this case.

Having read Apple's appellate brief, I actually feel more strongly than before that the reduction of the damages award Samsung is seeking is really warranted.

Finally, I have to acknowledge that I had previously missed an important detail that footnote 22 (page 78) has now drawn my attention to: the USPTO's rejection of the '915 pinch-to-zoom API patent claims (which Apple is appealing, but which the examiner is still defending) is based on partly different prior art than theone Samsung presented at the 2012 trial. Technically, this could help Apple defend the patent in the appeal of the California ruling despite whatever else is going on in the USPTO reexamination proceedings. Still, the fact of the matter is that the '915 patent, based on where things currently stand at the USPTO, would not have been granted in the first place if the examiner had been aware of all of the relevant prior art. There are sometimes multiple ways to invalidate a given patent, so the '915 patent is still at risk in this appeal, and invalidation would most probably be the correct outcome.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: